First home savers scheme could be a disaster

housing/Federal-Budget-2017/

19 May 2017
| By Jassmyn |
image
image
expand image

The introduction of the First Home Super Savers Scheme could be the beginning of allowing other withdrawals from superannuation which would be a disastrous approach, according to the Labor’s Shadow Minister for Small Business and Financial Services, Katy Gallagher.

Speaking at Super Review’s Future of Super conference on Thursday, Gallagher said the scheme severely undermined the super system and that it would not do anything to resolve the housing affordability issue

Gallagher also said that the policy could have unintended impacts on super fund members and that there were details that were still unclear.

“The Government’s policy is that the amount of earnings that will be released to the first home buyer will be calculated using a deemed rate of return based on the 90 day Bank Bill rate plus three percentage points. It is not clear what would happen in the event that the prescribed earnings rate for housing deposits differs from the earnings of the super fund,” she said.

“For example, if the housing deposit earnings rate is higher than what the super fund earns, will other members cross subsidise those who withdraw their super for housing? Or will the super fund need to draw from the member’s compulsory super savings?”

She noted that the policy would be difficult to implement as while the Australian Taxation Office (ATO) would be primarily responsible for administering the scheme, there were significant gaps in data and reporting of super to the ATO that would make it difficult.

“These data gaps may make it difficult for the ATO to implement the first home super saver policy effectively and with job losses and other pressures on the ATO, which are well known and documented, it’s difficult to see how they would prioritise or manage this scheme,” she said.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

So we are now underwriting criminal scams?...

2 months ago

Glad to see the back of you Steve. You made financial more expensive, not more affordable as you claim, and presided ...

2 months ago

Completely agree Peter. The definition of 'significant change is circumstances relevant to the scope of the advice' is s...

4 months 1 week ago

A Sydney financial adviser has been permanently banned from providing any financial services, with the regulator deriding his “lack of integrity, trustworthiness and prof...

3 weeks 1 day ago

Minister for Financial Services, Stephen Jones, has provided further information about the second tranche of the Delivering Better Financial Outcomes (DBFO) reforms....

2 weeks ago

One licensee has lost 27 advisers in the past week, now sitting at zero, according to the latest Wealth Data figures....

3 weeks 1 day ago

TOP PERFORMING FUNDS